Forget What You've Read About TikTok

Issue 37

09.21.20 - There has been a lot of talk and rumblings lately on the TikTok fiasco but here, as I see it, is an honest assessment of the situation: No one knows how this is really going to play out. It was reported recently that in an odd meeting between Oracle and Walmart there were talks of a spin-off of TikTok. In the scenario, the app would essentially be managed by Walmart, with Oracle to be used as it cloud-services provider. A new entity would be created called TikTok Global to go public on American exchanges at a valuation of around $60 billion. Nevertheless, nothing is set in stone.

Why? The Chinese parent company Byte Dance has yet to fully agree to anything and both the American & Chinese governments have yet to fully give it their blessing. In a strange sequence of events, the White House is muscling one of the world’s largest private companies into a weird corner. The deal is tentative, but it has staved off a US App store ban for one week. It is also unclear that directing TikTok’s American user base to an Oracle-controlled environment will be enough to address all of the looming security concerns over user privacy - Where the data is supposedly being housed may not be enough.

There is a vast bevy of conflicting information out there. Oracle is saying that Byte Dance will not have an ownership stake in the new company, while Byte Dance is saying that it will retain a majority ownership stake. The White House also has said that it is going to receive a $5 billion piece of the deal as a tax, which Byte Dance plans to contest.

What is clear is that Oracle wants a cloud contract, Walmart wants a platform to reach the Zoomers and the Administration wants a foreign policy win, while fulfilling its dream to diversify the West Wing of the White House into a part-time M&A advisory.

Source: Wall Street Journal